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While Multi-Family Industry Reports are Mixed, Opportunities Abound for Pre-Fab

Since we are three-quarters of the way through the year, we thought we’d take a brief look back at how the multi-family marketplace has fared in 2019. Sifting through recent multi-unit residential construction reports reveals a mixed bag for one of modular bathrooms’ key markets.

On the positive side, Multifamily Executive (MFE) recently shared the following statistics from Berkadia’s National Trends Multifamily Report for Second Quarter 2019:

  1. The current occupancy rate for multi-family homes is 95.7%, up 30 basis points compared with 2Q 2018. This growth rate is attributed to the rising costs of homeownership.

  2. Leasing activity rose from 323,064 newly occupied units in 2018 to 330,531 net units.

  3. Up 3.6% from the last five years, developers added nearly 290,000 new multi-family units.

Analyst insights from IBISWorld are also encouraging. Pulling from the US Census Bureau, the article reports: “Building permits for multifamily structures, which signal how much multifamily construction is in the pipeline, have also risen over the past five years. (…) These trends indicate multifamily construction activity will continue its upward climb in 2019, supporting expected industry revenue growth of 3.1% in 2019.”

The author cites rising rental activity, reduced housing affordability and the fact that younger generations are opting for apartment living in major cities as the key demanddrivers. You can learn more about this generational shift in our 2017 market update.

On the flip side of the coin, MFE writes that according to the U.S. Capital Trends – Apartment Report, garden-style apartments are trending downwards. The Apartment Report goes on to say that “Sales volume for the garden variety are also showing an off-year as compared with 2018.”

Fortunately, for those in the modular bathroom pod business, there has been more of a preference towards mid-/high-rise multi-unit residential applications. These segments are ideal for prefabricated solutions. A modular approach affords an economy of scale, where the more units that require a bathroom, the more contractors proportionately save on their bottom line. With the larger output, the more the costs of offsite manufacturing can be spread out.

The MFE roundup speaks to another potentially downward trend, noting Real Capital Analytics’ findings: “The apartment sector had been the leader for price growth over the last two years but has ceded that position to the industrial sector. Prices are growing for apartments but at a decelerating pace.” If this trajectory holds true and the multi-family market does slow, the good news is prefab manufacturers are uniquely poised to find opportunities in the secondary sector. As an infographic on Constructible illustrates, modular methods are already on the rise in the mechanical, electrical and plumbing (MEP) industry. The infographic further states: “by using standardized processes to assemble as much as possible off-site, costs and lead times (in the MEP industry) are significantly reduced.”

For a look at how SurePods pre-fab bathrooms have been utilized across affordable housing applications, military barracks, high-end senior living communities and more, click through our multi-unit residential projects. And stay tuned for more on SurePods’ latest multi-family project, located in the illustrious North Eastern US!


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